Are Mergers and Acquisitions in your future? Part 2

May 7th, 2012

Why Consider a Merger or Acquisition?

The reasons to consider a merger or acquisition are many and include:

  • To gain economies of scale
  • To increase financial growth
  • To achieve vertical integration
  • To eliminate competition
  • To acquire new assets
  • To hedge a counter-cyclical business
  • To gain Intellectual Property (IP)
  • To expand into new markets
  • To expand into complimentary products and services
  • To eliminate emerging IP and product threats
  • To acquire new customers
  • The need or desire to acquire or merge is always present in the business world but the challenges are many.

Challenges of Mergers and Acquisitions

When it comes to mergers, the merging companies must become fully integrated, meaning cultures must be meshed, operations brought together, and core competencies of the resulting organization improved.  Mergers are most common when an industry begins to consolidate in order to survive. Such is the case with the consolidation occurring right now within the airline industry.  This fight for survival brings up a whole other set of business and psychological issues and challenges that must be managed along the way.

In the case of acquisitions, the challenge turns to how the buying company will handle the acquired company.  Whether to integrate or leave the company as an autonomous unit is the most common initial concern.  Cultural, financial, operational, and strategic questions and concerns abound in the process.

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